Released December 24, 2024 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Strong economic growth, powered by the construction of data centers, semiconductor manufacturers, cybersecurity facilities, medical technology companies, battery and energy-storage manufacturers and population growth in its service territory, has caused electric utility Arizona Public Service Company (APS) (Phoenix, Arizona) to increase its four-year capital expenditure (capex) program 24%, to an estimated $9.65 billion for the 2024-2027 period.
Click on the image at right to see a map of the current and future clusters of commercial and industrial large loads served by APS.
The updated capital spend information was contained in the third-quarter earnings report from APS' corporate parent, Pinnacle West Capital Corporation (NYSE:PNW) (Phoenix, Arizona), released November 6.
Industrial Info is tracking 42 capital projects involving APS collectively valued at approximately $2.7 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for the project reports.
The major projects include:
Measured by year, APS expects to make slightly more than $2 billion in capital investments in 2024, $2.4 billion in 2025, $2.55 billion in 2026 and $2.65 billion in 2027. By function over the four-year period, APS plans its heaviest investments in generation (about $3.5 billion), followed by distribution ($2.6 billion) and transmission ($2.2 billion). A total of $1.3 billion in capital outlays are earmarked for "other" projects.
Click on the image at right to see a year-by-year and functional breakdown of APS' planned capital spending for 2024-2027.
APS serves most of the Grand Canyon State, and the drivers of growth are numerous. On the November 6 earnings call, APS executives said the utility serves large parts of Maricopa County, the state's business center and most populous county. Maricopa County was the fourth-fastest growing county in 2023. It ranked #1 for economic development by Site Selection magazine. Phoenix housing is relatively affordable compared to other major cities in the region. And Phoenix is ranked #1 out of 15 top growth markets for manufacturing by Newmark Group, a global real estate firm. APS expects to add about 40,000 new customers this year, bringing its customer count to 1.4 million.
All those new business and residential customers are expected to push electric load growth sharply upward. Pinnacle West's 10-Q form filed at the U.S. Securities and Exchange Commission (SEC) said this about APS' recent and projected electric load growth: "For the three-year period ended 2023, annual retail electricity sales growth averaged 2.6%, adjusted to exclude the effects of weather variations. Due to the expected growth of several large data centers and new large manufacturing facilities, we currently project that annual retail electricity sales in kilowatt-hours will increase in the range of 4.0% to 6.0% for 2024 and 2025 and that average annual growth will be in the range of 4.0% to 6.0% through 2027."
In addition to strong growth, APS is on a decarbonization path. About 76% of its electricity was generated by emitting resources in 2005, but that sum declined to 50% in 2019. Future plans call for steadily reducing reliance on emitting generation resources to 2050, when the utility plans to have its generation resources be net zero.
Click on the image at right to see APS' steady reduction of emissions from its generation since 2005, and its goal of getting to net-zero by 2050.
Between 2000 and 2028, APS expects to have signed contracts for more than 8,500 MW of clean energy and storage. The utility is planning another all-source request for proposals (RFP) as electric load continues to grow. Through September 30, 2024, about 182,000 residential and grid-connected photovoltaic systems have been installed in APS' service territory.
For the third quarter, corporate parent Pinnacle West earned about $395 million on $1.8 billion of revenue. Most of that revenue and profits came from the APS unit. Quarterly and year-to-date results were boosted by hotter-than-average temperatures and the effect of a general rate case decided in 2022.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The updated capital spend information was contained in the third-quarter earnings report from APS' corporate parent, Pinnacle West Capital Corporation (NYSE:PNW) (Phoenix, Arizona), released November 6.
Industrial Info is tracking 42 capital projects involving APS collectively valued at approximately $2.7 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for the project reports.
The major projects include:
- The 500-megawatt (MW), two-phase Dateland Grassroot Proving Ground Photovoltaic plant. This $580 million project is scheduled to be built in two 250-MW phases. Construction of Phase 1 has started and is expected to be completed in a matter of weeks. Phase 2 is expected to begin construction in late 2025 and be operating by late 2026. A battery energy storage system also is being constructed on the Dateland campus.
- The 300-MW, gas-fired unit addition to the Redhawk Generating Station, valued at about $325.5 million. This project is being engineered now and is scheduled to be operating by yearend 2026.
- A 60-mile, 500 kilovolt (kV) transmission will extend from the existing Saguaro Substation to the existing Winchester Substation. It will help ensure reliability and meet any future growth in the area. This project, called the Saguaro-Winchester Transmission Line Project, is valued at $185 million. Construction is scheduled to begin in mid-2026 and be completed by mid-2027.
- The 69-mile, 500-kV Delaney-Quartzsite Transmission Line, valued at about $150 million. This project is slated to begin construction at the end of 2027 and be operating by yearend 2028.
- The Sundance gas-fired generator is sized at 90 MW and expected to cost about $100 million. This Casa Grande, Arizona, project is in the engineering stage. It is scheduled to begin operating in March 2026.
Measured by year, APS expects to make slightly more than $2 billion in capital investments in 2024, $2.4 billion in 2025, $2.55 billion in 2026 and $2.65 billion in 2027. By function over the four-year period, APS plans its heaviest investments in generation (about $3.5 billion), followed by distribution ($2.6 billion) and transmission ($2.2 billion). A total of $1.3 billion in capital outlays are earmarked for "other" projects.
APS serves most of the Grand Canyon State, and the drivers of growth are numerous. On the November 6 earnings call, APS executives said the utility serves large parts of Maricopa County, the state's business center and most populous county. Maricopa County was the fourth-fastest growing county in 2023. It ranked #1 for economic development by Site Selection magazine. Phoenix housing is relatively affordable compared to other major cities in the region. And Phoenix is ranked #1 out of 15 top growth markets for manufacturing by Newmark Group, a global real estate firm. APS expects to add about 40,000 new customers this year, bringing its customer count to 1.4 million.
All those new business and residential customers are expected to push electric load growth sharply upward. Pinnacle West's 10-Q form filed at the U.S. Securities and Exchange Commission (SEC) said this about APS' recent and projected electric load growth: "For the three-year period ended 2023, annual retail electricity sales growth averaged 2.6%, adjusted to exclude the effects of weather variations. Due to the expected growth of several large data centers and new large manufacturing facilities, we currently project that annual retail electricity sales in kilowatt-hours will increase in the range of 4.0% to 6.0% for 2024 and 2025 and that average annual growth will be in the range of 4.0% to 6.0% through 2027."
In addition to strong growth, APS is on a decarbonization path. About 76% of its electricity was generated by emitting resources in 2005, but that sum declined to 50% in 2019. Future plans call for steadily reducing reliance on emitting generation resources to 2050, when the utility plans to have its generation resources be net zero.
Between 2000 and 2028, APS expects to have signed contracts for more than 8,500 MW of clean energy and storage. The utility is planning another all-source request for proposals (RFP) as electric load continues to grow. Through September 30, 2024, about 182,000 residential and grid-connected photovoltaic systems have been installed in APS' service territory.
For the third quarter, corporate parent Pinnacle West earned about $395 million on $1.8 billion of revenue. Most of that revenue and profits came from the APS unit. Quarterly and year-to-date results were boosted by hotter-than-average temperatures and the effect of a general rate case decided in 2022.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
